Domestic benchmark indices extended losses on Wednesday after opening in the green, with heavy selling in banking, auto and IT stocks dragging the market sharply lower.
At around 10:47 am, the BSE Sensex was down 750.68 points or 0.96% at 77,455.30, while the Nifty 50 slipped 208.25 points or 0.86% to 24,053.35.
The market had opened in positive territory earlier in the session but quickly reversed course as selling intensified across heavyweight stocks.
The fall was largely led by banking stocks. Shares of HDFC Bank dropped more than 1.4%, while ICICI Bank declined around 1.3% and Axis Bank fell over 2%, putting significant pressure on the indices.
Auto stocks also saw sharp declines, with Mahindra & Mahindra tumbling nearly 3%, while Bajaj Auto fell close to 2%. Technology stocks such as Tata Consultancy Services and Infosys also traded in the red.
However, a few stocks bucked the broader market trend. Sun Pharmaceutical Industries gained over 1%, while Hindalco Industries, Adani Ports and Special Economic Zone and Coal India traded higher.
According to V. K. Vijayakumar, investors should closely watch the trend of foreign and domestic institutional flows.
“There are some important market trends that investors should analyse and try to understand now. One, the FII vs DII game is back to the last one-year pattern of sustained selling by FIIs being more than matched by sustained buying by DIIs. Given the continuing indifference of FIIs towards India and the sustaining inflows into Indian equity mutual funds, this game is likely to continue in the near-term,” he said.
He noted that despite the broader weakness, some sectors are showing resilience.
“Segments like pharmaceuticals and domestic consumption themes like telecom, automobiles and defence are exhibiting resilience,” Vijayakumar said.
He added that sustained foreign investor selling has made large banking stocks attractive for long-term investors.
“Sustained FII selling has made large banking stocks, which constitute the largest segment of FIIs’ assets under management, attractive. These stocks have the potential to reward investors who can buy and hold them for at least two years. Here patience is the key,” he said.
Vijayakumar also said the decline in Brent crude prices to below $88 per barrel could improve risk-on sentiment in the market.